As my colleagues and I advise law firms on governance issues, such as managing the growth of the partnership, partner compensation, or capital requirements, we and our clients sometimes discover that it has been many years since the partnership agreement, partnership deed, by-laws, or other corporate "constitution" has been reviewed.
Although signing the partnership agreement is a time-honored ritual of becoming a partner, we have actually seen partnership agreements that do not bear the signature of any current partner. In a very few cases, the partners have been unable even to locate any copy of their partnership agreement.
I hasten to point out that these law firms are not bunches of bumbling incompetents. Almost all of them are otherwise well-managed and reasonably successful. With all the demands on partners' time, sometimes the basic foundations of law firm governance are overlooked, assumed by the partners to remain solid despite the passage of time.
This assumption ignores a fundamental risk in business. Past success guarantees nothing in today's legal markets.
To read more about updating your partnership agreement, visit the Walker Clark Worldview blog.